The scenario of a V-shaped recovery seems impossible when the economic picture across the continents is still bleak due to the negative impacts and complicated developments of the COVID-19 pandemic.
In Europe, a series of epidemic hotspots recently broke out in a second wave, countries having to tighten control measures, greatly affecting the continent's recovery efforts.
It is considered not as serious as the first wave, but according to experts, blockade measures being reimposed by many European countries have still had a strong impact on the fragile recovery of the “Old Continent”. The European Commission (EC) has warned that the speed of recovery of EU economies may be slower than first forecast.
The coming months will be a challenging period for all EU members, requiring early internal consensus on a EUR750 billion economic recovery plan. EU members are advised to prepare and implement reforms and investment plans to support economic recovery and transformation.
The deterioration of the health system is increasing the risk of a double recession in 19 countries in the Eurozone. The Eurozone economy dropped by 12.7% in the first nine months of 2020 and in the second quarter alone, it decreased by 11.8%, an unprecedented drop.
In France, business operations are forecast to drop by about 15% if a blockade is imposed. In Spain, an economic recovery was recorded in the third quarter, but output is still 8.7% lower than that a year ago. The second blockade could cost the German economy about EUR19.3 billion. Berlin is planning to spend EUR10 billion euro to support businesses hard hit by the new blockade.
The world's number one economy was also seriously affected, with tens of millions of workers in the US unemployed and GDP plunging 31.7% in the second quarter. The main terms of the US$2.2 trillion package as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March to help the US economy overcome the pandemic, have expired; and a new bailout package is now urgent in the context that the epidemic is showing no signs of easing.
People in the US are expecting an aid package worth US$2 trillion will be adopted to support the troubled economy. The US Federal Reserve (FED) has warned that the slow economic recovery could trigger a new recession. However the bailout package will certainly help the US economy recover faster and stronger.
Despite being one of the regions that witnessed positive economic recovery in the third quarter, Asia is still facing many difficulties, when the growth momentum of economies unequal. The International Monetary Fund (IMF) forecasts that the Asian economy will decline by 2.2% this year, in the context of the pandemic still having a negative impact on many countries, but will then rebound and reach 6.9% in 2021. Even with this positive growth rate, production for the entire region in 2021 is still lower than forecasts made before the pandemic.
Meanwhile, the Middle East and North African countries have experienced their worst period since 1978, when the regional economy declined by 4.7%. The region needs to step up its reforms and diversification efforts as economies face unprecedented challenges caused by the pandemic alongside plunging oil prices. The Latin American economy is also forecast to decline 8.1% this year and will likely grow by only about 3.6% in 2021.
The global economy is in very difficult times, it is expected that until 2023 it will be very difficult to return to growth rates similar to the period before the COVID-19 pandemic. Signs of slow recovery and an uncertain outlook require new packages of measures to create growth momentum in countries around the world.
